Uranium Energy has quickly developed an impressive portfolio of acreage, permits, and processing infrastructure in Texas and is shaping up to be a dominant leader in domestic uranium production for a growing global market that continues to crave nuclear as a means of satisfying the burgeoning demand for electricity.
PM Harper was on an Asian tour recently, capped off by attending the Nuclear Security Summit in Seoul, where there is a strong future for Canadian output, with Saskatchewan being most notable as a source of high-grade North American uranium. This subject was discussed in a recent Business News Network interview of Vancouver-based Casey Research guru (which is renowned for their sector analysis), Marin Katusa, where UEC was noted as being one of a handful of select domestic companies well-positioned to make serious moves off the prevailing dynamics.
One year post Fukushima we see Germany attempting to scale back nuclear output, despite the obviously unrealistic goal of closing nuclear plants down by 2022. Pre-Fukushima U3O8 yellow cake was around $70 with the spot price not uncommonly hitting the $75-77 range, but now were around $50 and stagnant one year hence. However, Japan, Korea, China, and even Russia have not only planned but already started production of new, large nuclear facilities.
This is a crucial phase for snap-back in U3O8 though as we are within 12 months of the US-Russian HEU (highly enriched uranium via large scale dismantling of former Soviet warheads) deal expiring, meaning momentum for the commodity should really start to pick up and that the entire sector looks charged with an energy world demanding more and more kilowatt hours.
With large Russian companies heavily investing in Africa and elsewhere, the Putin-led move to secure raw materials infrastructure is evident in the uranium sector, leading to a clear indicator for the global nuclear market that nuclear isn’t going anywhere. In fact the profile seems rather clear that not only is nuclear here to stay, but governments and industry across the globe will be looking to create modern infrastructure to avoid the pitfalls of TEPCO and Fukushima, with better equipment and facilities.
With Putin moving to secure stable supply lines via an off take agreement with China, or other, more permanent feed solutions, in order to crystallize long-term nuclear output for the Russian market, it looks like the future of demand for uranium in the U.S. (we import upwards of 92-95% of our uranium) is clear. It is increasingly clear that Russia, China, and India are holding many of the cards required to execute a competent nuclear strategy, with Russia being in an enviable, almost monopoly position as ongoing deals emerge.
That’s why a domestic ISR operation like UEC is so important and why investors are looking very closely at this rapidly growing uranium miner. The efficient, environmentally friendly ISR method (in-situ recovery is basically injected-solution mining, use pump-in and recovery/production wells across a grid on the acreage) of resource recovery employed by the company is just an excellent bonus. The future of US energy security depends on nuclear and on domestic uranium producers like UEC.
So the era of cheap HEU-derived yellow cake is drawing to a close and the spot price hasn’t moved upwards really since Fukushima, but the fundamentals are like an elephant in the room. That’s okay, UEC has an elephant gun: cheap, efficient, low-environmental impact, yet high-volume ISR of high-quality domestic uranium resources, along with a shrewdly located processing facility to handle production of the final product.
We lack the infrastructure to down-blend our own nuclear warheads like the Russians have done for the HEU program. We would have to send our warheads to Russia for them to down-blend, then ship back – this is a critical energy security vulnerability gap and few companies other than UEC possess the competencies, infrastructure, and capability to deliver domestically-sourced solutions. Katsua emphasized the global playing field and overall market vector, with 64 nuclear plants currently under construction, 150 planned, and 330 proposed as sufficient evidence to demand U.S. action addressing the problem of where exactly we intend to get the uranium we need to power 20% of our own electrical generation architecture.
Low cost producers like UEC, of which there are few, are in a prime position to experience strong growth as the underlying market dynamics progress in an energy-hungry, growing world, with the next twelve months being an obvious window of major activity as elements within the market prepare for the HEU-related falloff of inputs.
Katsua put a spotlight on UEC as a cherry pick for investors looking to play the uranium sector “split”. Texas location, permitting in-hand (or looking solid), extremely low-cost production method with dollars spent per quantity extracted among the lowest in the entire sector thanks in large part to ISRs efficiency and what UEC has done to revolutionize the technology, are all salient points for investors to examine closely.
The operational footprint UEC has amassed between the company’s four main sites in the heart of the South Texas Uranium Belt, where some of the highest-grade domestic uranium available exists, is impressive, and the company is constantly moving to secure additional acreage around its centrally-located Hobson Processing facility:
• Hobson Processing Plant
Operating – The Hobson ISR Processing Plant is central to Texas Operations and is designed to process uranium-loaded resins to final U3O8 product.
• Palangana Uranium Project
Producing – Satellite Project with a 2.2M lb Resource (NI 43-101).
• Goliad Uranium Project
Final Stage of Permitting – Satellite Project Amenable to ISR with a 6.9M lb Resource.
• Salvo Uranium Project
Phase One Drilling – Planned as a third Satellite Project with a 2.8M lb Resource.
• Nichols Uranium Project
Phase One Drilling – Planned as a fourth Satellite Project with a 1.31M lb Resource.
Famed mineral hound Mickey Fulp, The Mercenary Geologist, known for his sector analysis and newsletters said of UEC last year that it was one of the few companies he was bullish about. This is high praise from Mickey, who indicated having continued to buy UEC post-Fukushima.
For more information on Uranium Energy Corp., please visit the company’s website at: UraniumEnergy.com
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